A truck drives by the Afton Inn at the corner of Main Streets and Royal Avenue in Front Royal.

FRONT ROYAL — The future of redevelopment at the Afton Inn remains in the air after the Town Council entered a closed session during a work session earlier this week to continue discussions regarding the derelict building.

A motion to enter the closed session states discussions should be limited to “compliance with the terms of the Town Hall/Afton Inn Land Exchange Agreement and restrictive covenants” and “legal obligations and remedies regarding the alleged Afton Inn contract default” by the Front Royal-Warren County Economic Development Authority.

As described in the authority’s $17.6 million lawsuit against nine defendants, the Afton Inn project is one of the many alleged avenues that Jennifer McDonald, former EDA director, used to embezzle credit lines reserved for town and county projects.

Those allegations include that McDonald — who was arrested in May on felony counts of embezzlement and obtaining money by false pretenses — doctored invoices for the Afton Inn’s renovation to pay personal credit card bills.

In 2014, the town traded its former Town Hall for the Afton Inn and the town then turned the Afton Inn over the EDA with a contract requiring that the authority to market and redevelop the building.

According to previous reports, the EDA was supposed to obtain a construction loan to fund the project but work was instead paid for through an unauthorized credit line. County and EDA Attorney Dan Whitten previously explained that developer 2 East Main — the company paying for the renovations — is still responsible for debt service on draws from the line of credit.

Town Attorney Doug Napier said over the phone that the contract between the EDA and town does not specify a date for when the redevelopment must occur due to the difficulty that comes with rehabilitating the old, long-dormant and dilapidated building.

Napier said that the Afton Inn was given to the EDA because the authority has more “redevelopment flexibilities and powers than do local governments” and it “just made sense.” He added that was “years before” anyone realized the problems occurring at the EDA.

Due to the alleged embezzlements involving the Afton Inn, Napier said “the whole project kind of ground to a halt” and the EDA “at this point in time, does not seem able to carry through with their obligation” of marketing and redeveloping the building.

“The the town is “trying to work with the EDA to get it to the point where it can fulfill its obligation,” Napier said.

Napier said the town does not want to make the issue “a big deal” or be confrontational and officials are “just discussing options to try and get things back on track.” Exactly what those options are, he could not reveal.

He added that the town already has filed a $3 million lawsuit against the EDA to recoup allegedly stolen taxpayer funds and officials are seeking a more cooperative effort in figuring out the issues at the Afton Inn.

“We know the EDA is having some problems. The town does not want to make it worse for them,” Napier said.

EDA Executive Director Douglas Parsons said over the phone that the authority is working with the town and a bank “to try and identify a path forward and get the Afton Inn project up and running again.”

“We are working actively to try and get legitimate construction financing in place in a method that’s agreeable to the town, the bank and the developer,” he said.

While Parsons said he did not want to “speak out of turn,” the EDA has gotten “favorable indications from the bank that they are willing to do a construction loan.” He added that while there are no guarantees, “the bank is certainly at the table “to find a “viable solution for all of the parties.”

Ideally, Parsons said that work would resume on the Afton Inn in time to seal the interior from the elements during the winter.

– Contact Josh Gully at jgully@nvdaily.com